# FARINA & ASSOCIATES, INC. X-17A-5 (2021-05-28) — Broker-dealer annual report - Company: FARINA & ASSOCIATES, INC. - Form: X-17A-5 - Filed: 2021-05-28 - Period: 2021-03-31 - Accession: 0000857504-21-000001 - CIK: 857504 - File #: 8-41953 - Material weakness: Yes - Auditor: Raines and Fischer LLP - Auditor location: New York, NY - Contact: Alan Krim - Phone: 5165261586 - Signed by: Marc Sabo (COO) Original filing: https://www.sec.gov/Archives/edgar/data/857504/000085750421000001/farinapublic21.pdf --- {0}------------------------------------------------ UNITED STATES SECURITIESANDEXCHANGEC0Ml\1ISSION Washington, D.C. 20549 # **ANNUAL AUDITED REPORT FORM X-17A-5 PART Ill** FACING PAGE | | OMB APPROVAL | |--------------------------|---------------------------| | OMB Number: | 3235-0123 | | Expires: | October 31, 2023 | | Estimated average burden | | | | hours per response 12.00 | | SEC FILE NUMBER | |-----------------| | 8-41953 | Information Required of Brokers and Dealers Pursuant to Section 17 of the · Securities Exchange Act of 1934 and Rule 17a-5 Thereunder | REPORT FOR THE PERIOD BEGINNING 04/Q 1 /20 | | AND ENDING 03/31/21
--------------------- | | |--------------------------------------------------------------------------|------------------------------|----------------------------------------------|--| | | lv1M/DD/YY | MM/DD/YY | | | | A. REGISTRANT IDENTIFICATION | | | | NAME OF BROKER-DEALER: FARINA AND ASSOCIATES INC. | | OFFICIAL USE ONLY | | | ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use P.O. Box No.) | | FIRM I.D. NO. | | | C/0 BAYAT CONSULTING INC., 14 WALL STREET, 20TH FLOOR | | | | | | (No. and Street) | | | | NEW YORK | NY | 10005 | | | (City) | (State) | (Zip Code) | | | NAME AND TELEPHONE NUMBER OF PERSON TO CONTACT IN REGARD TO TillS REPORT | | | | | | | (Area Code - Telephone Number) | | | | B. ACCOUNTANT IDENTIFICATION | | | ## INDEPENDENT PUBLIC ACCOUNTANT whose opinion is contained in this Report\* ## RAINES AND FISCHER LLP | | (N ame - if individual, stale last, first, middle name) | | | |----------------------------------------------------------------------------|---------------------------------------------------------------------|---------|------------| | 555 Fifth Ave-
Suite 901 | NEW YORK | NY | 10017 | | (Address) | (City) | (State) | (Zip Code) | | CHECK ONE:
[{]Certified Public Accountant
Public Accountant
L--.1 | Accountant not resident in United States or any of its possessions. | | | | | FOR OFFICIAL USE ONL V | | | | | | | | | | | | | *\*Claims f or exemption from the requirement that the annual report be covered by the opinion of an independent public accr:mntant must be supported by a statement of f acts and circumstances relied on as the basis for the exemption. See Section 240. 17a-5(e)(2)* SEC 141 0 (11 -05) Potential persons who are to respond to the collection of Information contained in this form are not required to respond unless the form displays a currently valid OMB control number. {1}------------------------------------------------ ## **OATH OR AFFIRMATION** | I, MARC SABO | , swear (or affirm) that, to the best of | | |-------------------------------------------------------------|------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------| | FARINA AND ASSOCIATES INC. | | my knowledge and belief the accompanying financial statement and supporting schedules pertaining to the firm of | | of MARCH 31 | | ------------------------------------------------------------------------------------
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are true and correct. I further swear (or affirm) that | | classified solely as that of a customer, except as foJlows: | | neither the company nor any partner, proprietor, principal officer or director has any proprietary interest in any account | | IAN G DOU
Notary Public, State of New York
Reg.No. 01CK)6340695
,
Qualified In Nassau County
'
Commission Expires 4/2512024 | | |-----------------------------------------------------------------------------------------------------------------------------------------------|--------------| | I | ceo
Title | | This report ** contains (check all applicable boxes):
0 (a) Facing Page. | | - 0 (b) Statement of Financial Condition. - O (c) Statement of Income (Loss) or, if there is other comprehensive income in the period(s) presented, a Statement of Comprehensive Income (as defined in §21 0.1-02 of Regulation S-X). - (d) Statement of Changes in Financial Condition. - (e) Statement of Changes *in* Stockholders' Equity or Partners' or Sole Proprietors' CapitaL - (f) Statement of Changes in Liabilities Subordjnated to Claims of Creditors. - - (g) Computation of Net CapitaL - (h) Computation for Determination of Reserve Requirements Pursuant to Rule 15c3-3. - (i) Information Relating to tbe Possession or Control Requirements Under Rule 15c3-3. - 0 (j) A Reconciliation, including appropriate explanation of the Computation ofNet Capital Under Rule 15c3-1 and the Computation for Determination of the Reserve Requirements Under Exhibit A of Rule 15c3-3. - 0 (k) A Reconciliation between the audited and unaudited Statements of Financial Condition with respect to methods of consolidation. - 0 (1) An Oath or Affirmation. - D (m) A copy of the SIPC Supplemental Report. - **D** (n) A report describing any material inadequacies found to exist or found to have existed since the date of the previous audit. *\*\*For conditions of confidential treatment of certain portions of this filing, see section 240.17a-5(e)(3).* {2}------------------------------------------------ Statement of Financial Condition For the Year Ended March 31,2021 ' {3}------------------------------------------------ ## MARCH 31,2021 ## Table of Contents | Report of Independent Registered Public Accounting Firm | | |---------------------------------------------------------|-----| | Statement of Financial Condition | 2 | | Notes of Financial Statement | 3-5 | {4}------------------------------------------------ ## **RAINES AND FISCHER LLP** CERTIFIED PUBLIC ACCOUNTANTS 555 FIFTH AVENUE grH FLOOR NEW YORK, NY 10017 ## REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders of Farina & Associates, Inc.: ## Opinion on the Financial Statement ![](_page_4_Picture_2.jpeg) We have audited the accompanying statement of financial condition of Farina & Associates, Inc (the "Company"), as of March 3 1, 2021, and the related notes (collectively referred to as the financial statement). In our opinion, the statement of financial condition presents fairly, in all material respects, the financial position of the Company as of March 31, 2021, in conformity with accounting principles generally accepted in the United States of America. ## Basis for Opinion This financial statement is the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's fmancial statement based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statement is free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting, but not for the purpo~e of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. Our audit included performing procedures to assess the risks of material misstatement of the financial statement, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the fmancial statement. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statement. We believe that our audit provides a reasonable basis for our opinion. We have served as the Company's auditor since 2020. New York, New York May 28,2021 {5}------------------------------------------------ ## STATEMENT OF FINANCIAL CONDITION MARCH 31 , 2021 ## LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: ### Commitments and Contingencies | ASSETS | | |--------------------------|---------------| | Cash | 109,419
\$ | | Due From Clearing Broker | 97,627 | | Commissions recievable | 129,925 | | Other Assets | 2,000 | | Total assets | 338,971
\$ | | Accounts payable and accrued expenses | 64,349
\$ | |---------------------------------------|--------------| | Notes payable PPP loan | 83,333 | | Total liabilities | 147,682 | | STOCKHOLDERS' EQUITY: | | |----------------------------------------------|------------| | Common Stock, no par value, 200 shares | | | authorized, 10 shares issued and outstanding | 30,000 | | Additional paid-in capital | 264,366 | | Retained earnings | (1 03,077) | | TOTAL STOCKHOLDERS' EQUITY: | 191 ,289 | | | | TOTAL LIABILITIES STOCKHOLDERS' EQUITY: See accompanying notes to financial statements 2 \$ 338,971 {6}------------------------------------------------ #### NOTESTO FINANCIAL STATEMENT #### MARCH 31, 2021 #### NOTE 1-ORGANIZATION AND DESCRIPTION OF BUSINESS: Farina & Associates, Inc. (The "Company") is a New York corporation formed in 1989. for the purpose of conducting business on the Hoor of the New York Stock Exchange ("NYSE"). The Company is registered as a broker-dealer with the Securities and Exchange Commission ("SEC") and is a member of both the Financial Industry Authority, Inc. ("FINKA") and the Securities Investors Protection Corporation ("SIPC"). The Company earns commissions as an introducing broker of securities transactions. The clearing broker carries all of the accounts of the customers and maintains and preserves all related books and records as are customarily kept by a clearing broker/dealer. #### NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: #### Basis of Presentation The accompanying financial statements have been prepared on the accounting in acordance with accomiting principles generally accepted in the United States of America ("GAAP"). #### Accounts Receivable The Company carries its accounts receivable at cost less an allowance for doubtful accounts. On a periodic basis, the Company evaluates its accounts receivables an allowance for doubtful accounts based on history of past write-offs and collections and current credit conditions. No allowance for doubtful accounts was required at March 31, 2021. #### Revenue Recognition Securities transactions (and the recognition of related income and expenses) are recorded on a trade date basis. During May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09. "Revenue from Contracts with Customers (Topic 606)." ASU No. 2014-09 establishes principles for recente upon the transfer of promised goods or services to customers, in an amount that reflects the expected consideration received in exchange for those goods or services. During 2015 and 2016, the FASB also issued 4SU No. 2015-14, which defers the effective date of ASU No. 2014-09; ASU No. 2016-08, " Principal versas Agent Considerations (Reporting Revenue Gross versus Net), which clarifies the implementation guidance on principal versus agent considerations in Topic 606; ASU No. 2016-10, "Identifying Performance Obligations and Licensing", which clarification of performance obligations and the licensing implementation guidance; ASU No. 2016-12, "Narrow - Scope Improvements and Practical Expedients" and ASU No. 2016-20, "Technical Corrections and Improvements to Topic 606", which both affect narrow aspects of Topic 606. Topic 606. Topic 606. Topic 606. Topic 606. Topic 606. Topi 606 (as anended) is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. The company may elect to apply the guidance earlier than fiscal years beginning after December 15, 2016. The amendments may be applied retrospectively to each prior period presented or retrospectively with the cumulative ettect recognized as of the date of initial application. The Company has assessed the effect that Topic 606 (as annended) has on its results of operations, financial position and has deternined that all revenues have been fully earned as of March 31, 2021. The Company's execution transactions generally settle T+2, upon which no performance obligations remain to fuffil the Company's obligations to its customers. During the twelve months ended March 31, 2021, three customers accounted for 25,30%, 14.10% and 12.44, respectively for a total of 51.84% of total revenue excluding the PPP loan forgiveness. #### Income Taxes The Company has elected to be treated as an "S" Corporation under the Internal Revenue Code and New York State tax regulations. I nder the provisions, the Company does not pay federal or state corporate income tuxes on its taxable income. Instead the stockholders are liable for individual income taxes of the Company's taxable income. The Company continues to pay New York City general corporation taxes. {7}------------------------------------------------ ## NOTES TO FINANCIAL STATEMENT MARCH 31, 2021 #### NOTE 2 - SUMMARY OF SIGNFICANT ACCOUNTING POLICIES (CONTINUED): #### Use of Estimates The preparation of financial statements and related disclosures in conformity with GAAY requires management to make estimates and assumptions that affect the reported anounts of assets and the disclosure of contingent assess and liabilities at the date of the financial statements, and the reported amounts of income and expenses during the reporting period. Accordingly, actual results could differ from those estimates and such differences could be material. #### NOTE 3 - CONCENTRATIONS OF CREDIT RISK: #### Cash The Company maintains principally all cash balances in one financial institution which, at times, may exceed the amount insured by the Federal Deposit Insurance Corporation. The Company is solely dependent upon daily bank balances and the strength of the financial institution. The Company has not incurred any losses on these accounts. At March 31, 2021, the amount in excess of insured limits was \$0. #### NOTE 4 - FINANCIAL STATEMENTS WITH OFF BALANCE SHEET CREDIT RISK: As a securities broker, the Company is engaged in buying and selling securities for a diverse group of institutional and individual investors. The Company introduces these transactions for clearance to another broker-dealer on a fully disclosed basis. The Company's exposure to credit risk associated with non-performance of customers in fulfilling their contractual obligations pursuant to securities transactions can be directly impacted by volatile trading markets which may impair customers' ability lo their obligations to the Company and the Company's ability to liquidate the collateral at an amount equal to the original contracted amount. The agreen the Company and its clearing broker provides that the Company is obligated to assume any exposure related to such non-performance by its customers. The Company seeks to control the aforementioned risks by requiring costomers to maintain margin collateral in compliance with various regulatory requirements and the elearing broker's internal guidelines. The Company monitors its customer activity by reviewing it receives from its clearing broker on a daily basis, and requiring customers to deposit additional collateral, or reduce positions, when necessary. #### NOTE 5 - NET CAP ITAL REQUIREMENTS: The Company is subject to the Securities and Exchange Commission Uniform Net Capital Rule (SEC Rule 15c2-1), which requires the maintenance of minimum net capital, and requires that the ratio of aggregate indebtedness to net capital, both as defined, shall not exceed 15 to 1. Rule 1.5c3-1 also provides that equity capital may not be withdrawn paid if the resulting net expital ratio would exceed 10 to 1. At March 31, 2021, the Company had net capital of \$229,589, which was \$224.589 in excess of its required no 55,000. The Company's percentage of aggregate indebtedness to net capital was 28.03%. {8}------------------------------------------------ ## NOTES TO FINANCIAL STATEMENT MARCH 31. 2021 #### NOTE 6 - RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS: The Financial Accounting Standards Board (the "FASB") has established the Accounting Standards Codification" or "ASC") as the authoritative source of generally accepted accounting principles ("GAAP") recognized by the principles entiodied in the Codification are to be applied by non governmental of financial statements in accordance with GAAP in the United States. New accounting pronouncements are incorporated into the issuance of Accounting Standards Updates ("ASUs"). For the year ending March 31, 2021, various ASCs issued by the FASB were either newly issued or had effective implementation dates that would require their provisions to be reflected in the financial statements for the year that ended. The Company has either evaluated or is currently evaluations, if any, of each of these pronomeements and the possible impact they may have on the Company's financial statement has deternined that the pronoment has ether limited or no application to the Company and, in all cases, implementation would not have a material impact on the financial statements taken as a whole. Note 7 - Notes Payable #### PPP Loans The Company received two loans from Signature Bank in the amounts of S83,333 each under the Paycheck Program established by the Coronavirus Aid, Relief, and Economic Security (CARES) Act and Economic Aid Act. The loans are subject to a notes dated April 29, 2020 and January 27, 2021. The first loan was forgiven by Signature Bank once authorization was received by the US Small Business Administration on March 16, 2021 and the second for the extent proceeds of the loan are used for eligible expenditures such as payroll and other expenses described in the CARES Act and Economic Aid Act. No determination has been made on the second loan as to whether the Company will be eligible for in part. The loan bears interest at a rate of 1% and is payable in monthly installments of principal and interest over 24 months beginning 6 months from the date of the loan may be repaid at any time with no prepayment penalty. #### NOTE 8 - SUBSEQUENT EVENTS: The company has evaluated events and transactions that occurred through May 28, 2021, which is the date the financial statements were available to be issued, for possible disclosure and recognition in the financial statements - · A coronavirus (COVID-19) was first reported in China. In January 2020, the World Health Organization declared it a Public Health Emergency of International Concern. This contagious disease outbreak, which has continued to spread to additional countries, and any related adverse public health developments, could adversely affect the Company's customers, service providers as a result of quarantines, facility closures, and travel and logistics restrictions in connection with the outbreak. More broadly, the outbreak could affect workforces, conomies and financial markets globally, potentially leading to an economic downturn. The ultimate impact of the COVID-19 is uncertain. Management continues to monitor the outbreak, however, as of the date of these consolidated financial statements the potential impact of such on the Company's business and operations cannot be reasonably estimated. - · The U.S. enacted the CARES Act which is an economic stimulus package to assist eligible small businesses to cover certain operational costs due to the adverse impact of COVID-19, In addition, the CARES Act includes temporary tax law changes to provide additional relief to U.S. businesses and individual taxpayers. Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.